Confidence among U.S. construction industry leaders held steady in December 2019 after surging in November, according to the Associated Builders and Contractors Construction Confidence Index released today. The average American contractor entered 2020 with confidence: Sales expectations, profit margins and staffing levels all remained above the growth expectations threshold, indicating a strong start to 2020.
70% of contractors expect their sales to increase over the first half of 2020, while nearly the same percentage of contractors expect to increase their staffing levels. Nearly half of contractors expect their profit margins to increase, while just 12% expect them to decline over the next two quarters.
- The CCI for sales expectations decreased from 69.5 to 68.8 in December.
- The CCI for profit margin expectations decreased from 61.3 to 60.
- The CCI for staffing levels increased from 66.9 to 67.2
“The U.S. economy is humming, and among the principal beneficiaries of that performance are nonresidential contractors,” said ABC Chief Economist Anirban Basu. “Sales expectations, despite inching a bit lower in December, remain especially robust, with seven in 10 survey respondents expecting sales increases and fewer than one in 10 expecting their sales to decline during the first half of 2020. Recently released data regarding construction spending and hiring in the U.S. strongly suggest that this confidence is justified. ABC’s Construction Backlog Indicator dipped in December but still indicates that contractors remain busy.
“Despite broad optimism regarding sales prospects, contractors’ expectations are somewhat more subdued regarding profit margins,” said Basu. “Though materials prices have been generally stable and energy prices have declined recently, workers are becoming more expensive, both in terms of wages and benefits. Shortfalls in the skilled trades are apparent throughout the nation, especially in the booming markets of the South and West. With U.S. unemployment hovering near a 50-year low, many construction workers may find opportunities in other segments, including logistics, and retirement rates remain elevated. All of this translates into ongoing increases in compensation costs and a squeeze on margins.”
CCI is a diffusion index. Readings above 50 indicate growth, while readings below 50 are unfavorable.
Related Stories
Market Data | Mar 14, 2018
AGC: Tariff increases threaten to make many project unaffordable
Construction costs escalated in February, driven by price increases for a wide range of building materials, including steel and aluminum.
Market Data | Mar 12, 2018
Construction employers add 61,000 jobs in February and 254,000 over the year
Hourly earnings rise 3.3% as sector strives to draw in new workers.
Steel Buildings | Mar 9, 2018
New steel and aluminum tariffs will hurt construction firms by raising materials costs; potential trade war will dampen demand, says AGC of America
Independent studies suggest the construction industry could lose nearly 30,000 jobs as a result of administration's new tariffs as many firms will be forced to absorb increased costs.
Market Data | Mar 8, 2018
Prioritizing your marketing initiatives
It’s time to take a comprehensive look at your plans and figure out the best way to get from Point A to Point B.
Market Data | Mar 6, 2018
Persistent workforce shortages challenge commercial construction industry as U.S. building demands continue to grow
To increase jobsite efficiency and improve labor productivity, increasingly more builders are turning to alternative construction solutions.
Market Data | Mar 2, 2018
Nonresidential construction spending dips slightly in January
Private nonresidential construction fell 1.5% for the month, while public sector nonresidential spending increased 1.9%.
Market Data | Feb 27, 2018
AIA small firm report: Half of employees have ownership stake in their firm
The American Institute of Architects has released its first-ever Small Firm Compensation Report.
Market Data | Feb 21, 2018
Strong start for architecture billings in 2018
The American Institute of Architects reported the January 2018 ABI score was 54.7, up from a score of 52.8 in the previous month.
Multifamily Housing | Feb 15, 2018
United States ranks fourth for renter growth
Renters are on the rise in 21 of the 30 countries examined in RentCafé’s recent study.
Market Data | Feb 1, 2018
Nonresidential construction spending expanded 0.8% in December, brighter days ahead
“The tax cut will further bolster liquidity and confidence, which will ultimately translate into more construction starts and spending,” said ABC Chief Economist Anirban Basu.